Teaching Your Children About Money and Finance

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child holding sign: "Give me liberty, not debt!"

There are ways to show your teens how far their money will stretch.  Even very small children can understand financial principles and handle money appropriately.  Although many kids have these experiences I’ve seen many a parent deal with heartbreak as they watch their adult children make financial mistakes. I’m not talking about small things like a late payment.  Rather, it’s huge lifestyle issues like living so far above their means to the point they have hundreds of thousands of dollars in debt. Those types of choices will likely cost them for a lifetime and cost them the ability to have a quality life. As parents it’s our responsibility to teach our kids not only right from wrong, but to show them how to make wise choices.  Scripture is clear about our role as parents:

Do not exasperate your children; instead, bring them up in the training and instruction of the Lord. Ephesians 6:4

Train up a child in the way he should go, and even when he is old he will not turn from it. Proverbs 22:6

Notice it doesn’t say to make your children do the right thing.  That is an early part of teaching, followed by setting an example for them, but these are not enough.

Teaching your children about finances is a lifelong process. When it’s age appropriate:

  • Explain why you shop at thrift stores, eat at home most of the time, or don’t take lavish vacations etc.
  • Teach them why you don’t buy everything you want or why you wait before you make some purchases.
  • Be honest with them about your choices.  Don’t tell them you can’t afford something if you’re really saving your money to be able to take a trip or buy something else.
  • Allow them to have their own money to spend and learn from those experiences. Guide them in good financial practices with their money, but ultimately let them make the decisions and learn from the consequences.

I don’t feel like parents should be completely open with their finances, but I do feel they should let their kids see the mistakes they made over the years. They need to see how their family’s finances have improved over the years as well.  Too many kids leave home expecting to live the same lifestyle as their parents currently live. Combined with their first “own money” it can make a financially fatal situation.

There’s no “one size fits all” method for teaching your children. But I do know that they must understand the reason why they should – or shouldn’t- do something, in order to truly learn.

Have you done something that was effective to help your kids learn about finances?

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